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Oil Prices Post Slight Gains After Janet Yellen Speaks

Worries about rising dollar countered by possibility of OPEC deal

Workers constructed an oil rig in Daqing, Heilongjiang province, China, in May. In Asia, September and October crude deliveries are buoyant after a summer of muted oil demand in industrial powerhouse China.
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Agence France-Presse/Getty Images

Brent, the global benchmark, rose 25 cents, or 0.5%, to $49.92 a barrel on ICE Futures Europe. Prices fell 1.9% on the week.

Oil prices have wavered this week as investors weighed continued concerns that the global market remains oversupplied against new indications that the Organization of the Petroleum Exporting Countries could agree to a production freeze in September.

U.S. commercial inventories of crude oil and refined products rose to a record high, a sign that the global glut of oil persists, federal data showed this week. But reports that Iran could join major producers in talks next month about coordinated action increased optimism among market participants.

“There’s a lot of price uncertainty,” said Robert Boslego, managing director of Boslego Risk Services in Santa Barbara, Calif. “Oil inventories keep reaching new highs,” he said, adding that the big question whether OPEC members will intervene “if prices go back down to $40.”

An increase in U.S. interest rates could lift the dollar, which would make oil more expensive for traders who conduct business in other currencies.

Also on Friday, weekly U.S. drilling data from oil-field services company
Baker Hughes Inc.
showed that the number of rigs drilling for oil in the U.S. was unchanged this week. The rig count had risen for eight straight weeks as the springtime rally in oil prices prompted some producers to invest in new production, sparking concerns among investors that the global oversupply of crude was set to persist and push prices lower. The lack of additional rigs this week could lessened those worries.

Bank of America Merrill Lynch said Friday it is holding its 2017 forecast for Brent at $61 a barrel, but noted that a rising dollar could keep oil prices lower than the bank expects. “Oil prices keep a strong correlation to the U.S. [dollar], and a hawkish Fed is a key risk to our outlook.”